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Croydon Buy-to-Let Guide

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    Everything You Need to Know About Croydon Buy-to-Let

    The Greater London property market is famously pricey, so investors are always on the lookout for the cheapest areas to snag a bargain.

    Croydon, located in London’s South East, has a reputation for affordable housing in the capital, but is it still worth investing in in 2024?

    Our UK buy-to-let area guide will provide all the information you need to get to grips with Croydon’s property investment scene.

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      Croydon street view

      Buy-to-Let Property Prices in Croydon

      According to Rightmove, the average property price in Croydon in late 2023 was £444,854. This is significantly more expensive than the UK average of £287,782, as calculated by the UK House Price Index from HM Land Registry, but more affordable than the figure for London, which was £515,504.

      The London property market has been sluggish in recent years, but the overall outlook for the market may show some promise for the future.

      Property experts Savills forecast a 13.9% capital value growth for London over the next 5 years to 2028. However, Investors should note that whilst this is a step in the right direction for London’s rental market, this is still the lowest projected growth in the UK, with areas like the North West and Wales expected to see highs of 21.4% and 20.2%, respectively.

      Certain pockets of Croydon are more affordable than others. Zoopla ranks Croydon CR0 as the 13th most affordable postcode in London to buy a home with an average price of £397,000.

      The high cost of living in central London is pushing people out of the inner zones and out towards the outskirts, including Croydon. Data from Rightmove last year showed a huge rise in property searches for London outskirts. This included a 228% increase in Coulsdon and a 115% increase for Purley.

      Learn More: Discover the latest stamp duty rates for buy-to-let in the UK and what to look for in a buy-to-let property with our updated 2024 guides.

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      Buy-to-Let Rental Market in Croydon

      According to housesforsaletorent.co.uk, the average monthly rent in Croydon is £1,908 PCM, which is noticeably more expensive than the UK average of £1,279 PCM, per the HomeLet Rental Index.

      London is known for having the lowest average rental yield of all UK regions, but the relatively affordable property and high rental demand in Croydon means a decent yield can be achieved in some cases.

      According to the BBC, Croydon had one of the most significant annual rental growths in the country in January 2023, increasing by 13.9%. The supply/demand imbalance in the private rental sector will likely continue to push up rents briskly.

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      Investment Properties for Sale in Croydon

      Various property types are available within the Croydon rental market – including terraced and semi-detached properties and flats. However, as mentioned, prices in Croydon are significantly higher than most UK regions, meaning that investors are likely to find greater affordability in alternative markets.

      On average, properties in Croydon saw prices of around £448,226 in the last 12 months. Of the total sales recorded, the majority were terraced properties, generating a total average cost of £468,438. Flats saw an average of £286,116, with semi-detached properties totalling £586,318.

      Overall, sold prices in Croydon were similar to last year and 6% higher than the 2021 peak of £423,715.

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        Croydon Market

        Buy-to-Let Investment in Croydon: Area Breakdown

        The town centre, located in the heart of Croydon, is a popular area to live in thanks to good amenities and its proximity to East Croydon station, which allows for excellent transport links to central London.

        North Croydon areas include Thornton Heath, Selhurst and Norwood. These districts are close to central Croydon and tend to be more affordable than further out areas. To the east, there are areas such as Addiscombe and Shirley. South Croydon is home to Selsdon, Sanderstead, Kenley and Coulsdon.

        Also home to one of the most prominent campuses at London South Bank Univesity, Croydon is quickly gaining a reputation as one of the capital’s largest growth centres.

        Further away from central Croydon, you can find separate areas and towns such as Addington and Purley. Districts to the south of Croydon border Surrey and are considered more upmarket.

        Selhurst

        Average Property Prices in Selhurst

        The average property price in this area is £368,177.

        Average Rental Yield in Selhurst

        The average rental yield in this area is 4.54%.

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          Croydon street view

          Addiscombe

          Average Property Prices in Addiscombe

          The average property price in this area is £405,925.

          Average Rental Yield in Addiscombe

          The average rental yield in this area is 4.27%.

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          Addington

          Average Property Prices in Addington

          The average property price in this area is £612,136.

          Average Rental Yield in Addington

          The average rental yield in this area is 3.62%.

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            Purley

            Average Property Prices in Purley

            The average property price in this area is £577,208.

            Average Rental Yield in Purley

            The average rental yield in this area is 3.25%.

            (Average property prices taken from Rightmove in late 2023, rental yield estimates calculated with figures from housesforsaletorent.co.uk in late 2023)

            What is the Best Area of Croydon to Invest in?

            Some of the area’s cheapest property can be found in northern parts of Croydon, leading to a more promising rental yield.

            For example, Selhurt’s gross average rental yield can be calculated as 4.54%.

            Overall, Croydon’s rental yields are lower than other parts of the country, so this can be considered a good yield for the area.

            Property can be much more expensive in the outer areas. In the case of Addington, the average can even be higher than the overall London average, making the village less attractive for property investors.

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            Why You Should Consider a Buy-to-Let Investment in Croydon

            Relatively Cheap Property

            For investors who want to get their own piece of the famous London property market, finding affordable pockets in the capital is more critical than ever.

            Croydon has a reputation as one of the cheapest places for property in London. While it is still much more expensive than the UK average price, it is significantly more affordable than the London average.

            Regeneration

            Croydon has had somewhat of a negative image in the past, but these days, the area is on the up.

            Various regeneration projects aim to build new homes, invest in cultural spaces and events, and establish Croydon as a premier business location in South London.

            The Croydon ‘Local Plan’ is a scheme to target suburbs and districts within Croydon, such as South Norwood, Thornton Heath, and Purley.

            Property investors can benefit from areas ripe for big regeneration projects, so it’s worth keeping an eye on which cities have ongoing or planned schemes. We have created a useful rental income calculator for our readers to use. By investing before the work is completed, good deals on property can still be found; after the benefits of regeneration come into effect, the property will likely appreciate in value. There is also often a positive influence on rental income and rental demand as the area becomes a more desirable place to reside.

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              Croydon New-Builds

              In recent years, there has been a surge in the appeal of newly constructed properties in the UK rental market. With distinct advantages over traditional residential units, these modern developments have captured the attention of landlords and tenants alike.

              Due to their brand-new status, these properties demand minimal maintenance and upkeep, allowing a swift transition for new tenants when moving in and enabling investors to see returns on their investments more promptly.

              Croydon is a rapidly growing area, with its population expected to exceed 400.000 in the near future. There are many regeneration projects in Croydon with the sole purpose of building new homes to meet this increased demand. The previously mentioned Local Plan requires the town to see around 32,890 new homes by 2036. Through schemes like Brick by Brick, Croydon Affordable Homes and Community-led housing, Croydon hopes to produce affordable and sustainable developments to meet its expanding pool of residents.

              Given current market dynamics, opting for new-build properties could present a promising opportunity for many investors.

              Yet, while Croydon offers a selection of new-build investment prospects, larger metropolitan hubs like Liverpool and Manchester may boast more expansive investment opportunities.

              Read More: Discover more about this investment red with our recent buy-to-let guides, covering everything from new-builds in Preston to the latest UK hotspots!

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                Off-Plan Property in Croydon

                Although new-build properties often attract considerable interest from tenants, they frequently come with higher price tags than older residential properties.

                One avenue for investing in newly constructed properties at a more accessible price point is through off-plan property investment.

                This strategy involves purchasing a property early in its development, often before construction has commenced. By doing so, investors can typically secure the property at a discounted price compared to standard market rates.

                Investing in off-plan properties offers the potential for significant appreciation in value once construction is completed. Generally, as a property approaches completion, its value tends to rise. In sought-after areas, there is also often robust rental demand, potentially leading to higher rental yields over time.

                The most promising off-plan investments tend to be located in emerging areas with well-established infrastructure and expanding employment opportunities.

                Additionally, areas undergoing regeneration often indicate higher potential for future new-build developments and capital growth.

                While there may be some potential for off-plan investment in the Croydon rental market, investors may find greater profitability by focusing on UK cities with a higher concentration of new developments in the pipeline.

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                  How Does Croydon Compare to Other UK Regions When It Comes to Buy-to-Let?

                  So, is Croydon the best UK investment for monthly income?

                  If you’re looking to invest in the London property market, the area may be worth considering.
                  Croydon has relatively affordable properties and features that make it attractive to potential tenants.

                  However, other London boroughs have been found to have cheaper property and higher rental yields, so it’s worth looking at good value areas like Bexley, Barking and Dagenham.

                  London commuter towns have also been rising in popularity recently, with prominent areas like Luton, Slough, and High Wycombe being particularly notable.

                  But for those looking further afield, much cheaper property and much higher rental yields can be found up north.

                  As London property prices become increasingly unassailable for many investors, major northern cities are gaining more attention.

                  For example, Zoopla states that the average rental gross yield in Liverpool is 7.21%, one of the highest in the country, and the average price of a buy-to-let property there is just £127,000, a far cry from the average Croydon property.

                  As previously mentioned, London is at the bottom of the leaderboard when it comes to regional capital growth projections. Elsewhere, though, Savills predicts regions like the North West (with prominent areas for buy-to-lets in Liverpool and Manchester) will have some of the highest expected growth – 20.2% by 2028.

                  Further Reading: Delve further into the UK rental market with RWinvest’s insights into buy-to-let property in Bradford.

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                    Want to Invest in Croydon in 2024?

                    Croydon can offer an investor affordable property compared to many other London districts, but overall, for those looking at buying a house to rent out, these prices could still be too pricey compared to other areas of the country.

                    As London property has become intimidatingly expensive over the past few years, many investors are turning to other cities, especially the North of England.

                    Explore other UK property investment hotspots with some of our recent buy-to-let area guides:

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                    Author

                    Jessica Ferris

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                    Jessica Ferris is a property writer at RWinvest, helping our readers stay ahead of property market trends with the latest news and statistics.

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